Suppose That the Real Exchange Rate Between the United States

question 238

Multiple Choice

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S. goods buys) ?

• A)an increase in the number of Kenyan shillings that can be purchased with a dollar
• B)an increase in the price of U.S. baskets of goods
• C)a decrease in the price in Kenyan shillings of Kenyan goods
• D)All of the above are correct.

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